After a career in NYC Steve joined Tech Coast Angels; he quickly started leading deals. Maybe it's his background as an attorney; whatever it is, he's tenacious when it comes to getting his deals closed.
If you're an entrepreneur trying to get funded in Southern California, you couldn't do better than to have Steve working your deal.
Julian Bryant invited me to be a mentor for Startup Weekend, San Diego. Because it coincided with with my birthday I immediately thought, what a great way to celebrate! Now I have 20 new friends in town.
Microsoft and Intuit are only a few of the sponsors underwriting the pizza and soda.
I'll drop by tomorrow for a free breakfast and monitor their progress.
Weekend pitch awards: runner-up GeekedIn and best pitch to Hoot on U.
Seems like there's an IPO a week here in Southern California, but they've been scarce for many years. Let's reach back into the archives to hear about this exciting company shortly after they were funded by the Tech Coast Angels.
The Tech Coast Angels rejoice as Green Dot (NYSE: GDOT) goes public. The original investors waited 9 years for this IPO, but it's worth it: as much as 110x returns for those who jumped in originally! Congratulations!
Take a trip back in time, 200 interviews ago, to listen to Steve Streit tell his amazing story.
It's a small world when it comes to early-stage investing. That's what you'll think after meeting Mumbai Angels' Prashant Choksey. Educated in San Diego he returned home to eventually organize one of only two angel groups in India.
In any group you'll see the 80-20 rule: most of the work done by a subset of the membership. Listen to Prashant's plans to incentivize these big contributors and keep them active.
"You guys have been hurt," the entrepreneur was telling me. "I get the
sense most angels have a $2-3 million dollar net worth and this downturn
in the market has hurt you."
These were astute insights from a
frustrated entrepreneur who invested a lot of time pursuing angel
investors. He was smart, articulate, funny and dedicated; he just had
lousy timing.
Ten days ago I was nervous, only 5 people had signed up and that included me and Dave Berkus. I needn't have worried because now we're oversold for the first presentation of Angel Investing 101: A Training Class for Angel Investors.
Stu Roberts, Orange County president of Tech Coast Angels, had the idea after listening to Bruce MacCormack talking about the benefits of the training he does for members of the Bellingham Angels. Why don't we do the same here at home where we've seen a surge in new members? I took the liberty of volunteering Dave; I'd "carry his bags" and cover the basics if he'd cover leveraging our
angel strengths into growing companies, including board service and
coaching, of which he is expert.
Maybe because the price is right (free), or maybe there genuinely is serious interest; whatever the case, we're over capacity for the conference room. We're over sold!
Angel investing from a world-wide perspective, that's what you get from the 2010 Hans Severiens Award recipient and Angel Capital Association Chairman Emeritus, John May.
For all the risk you take as an early-stage investor, wouldn't you love a 2 for 1 match?
JumpStart Inc's CEO Ray Leach and Tech Coast Angel Dave Berkus discuss angel funds and in Ray's case, he enjoys great support from the state of Ohio where they've recognized the importance of angel investors in creating jobs. Dave and I groan with jealousy as Ray describes the $3.5M Ohio has granted to 2 native angel groups.
Dave has his own news: today he announces the new TCA sidecar fund, the Angel Capital Fund. No government matching, but it does have many well thought out features that your angel group will want to implement.
These new funds mean more money for entrepreneurs.
Now I know how you feel. It stings and stays with you, I'm still smarting the day after, so I'll write this post to hopefully put the experience behind me.
I'd been working with a serial entrepreneur for almost 2 years. He's an accomplished serial entrepreneur. His prior startup built specialized semiconductor chips. He sold that company to another who was quickly acquired, too, then the combination was sold for over $100M. His piece of that pie was not great, but that is an impressive resume. And he continues to be an exceptional entrepreneur. He's built a gaming engine of his own design and has attracted several commercial customers as well as gamers to his site. Besides being in revenue, he's invested $700k of his own money into the deal; that's skin in the game!
Angel Investing 101: Why (Not To) Join an Angel Group?
Thinking about joining an angel group?
Let's examine the pros and cons with Curtis Gunn, Chairman of Tucson's Desert Angels, Bruce MacCormack, founder of the Bellingham Angels, and Hall Martin, Vice Chairman of the Baylor Angel Network and member of the Central Texas Angel Network in Austin. Great geographic diversity, they cover quite a bit of territory!
And we close the session with reasons not to join an angel group. You'll enjoy hearing these points, too!
In Southern California? Meet me at UC Irvine June 17th where I'll speak on the current state of early investing, details.
It started with a meet-up, a shout out to entrepreneurs looking to meet local angel investors. The first one burdened the venue when 100 entrepreneurs arrived. Now there are bigger venues and LA's doing them, too. The format is simple: no program, just a mingle for networking. But out of the very first one, a small startup emerged and has been funded. Is that news? Yes, because it's one of only two new companies that Tech Coast Angels has funded so far in 2010.
Where's all the investors' money going? Into existing portfolio companies, to keep them going during a tough economy when any funding is hard to find.
So what was Vokle's pitch and how did TCA member Ray Chan brilliantly package it such that it was over-subscribed?
Want your shot at local investors? Come to the next meetups: June 8th hosted by Jason Calacanis and June 15th by the Tech Coast Angels, both in Orange County.
Why is new drug discovery is less attractive to angel investors?
There are exceptions to everything, as Steve Flaim describes. Steve's the President of the Tech Coast Angels' San Diego network where they operate a Life Science screening process separate from Software and IT. With all this experience, Steve sees 2 types of Life Science deals: new drugs and Bio-Tech. One will offer quicker exits for less investment.
This is part 1 of a 2 part series on Angel Investing 101 where you'll hear Steve debunk many rookie angel investing strategies.
Sequoia funded Mahalo, Silicon Alley Reporter, Weblogs, Inc., he's a serial entrepreneur who's created a new angel investing model, the Open Angel Forum.
Just as you might expect, Jason offers great advice for angel investors, great advice for entrepreneurs.
Eight angels groups pass the hat in, arguably, the largest ever syndication effort across New England. In the process, some interesting lessons for future syndications emerge.
The largest syndicate deserves the largest ever panel discussion on the Show. Meet Incentive Targeting CEO Win Burke together with investors Paul Silva, Michael Mark, DR Widder and Ty Danco.
How many people move from Las Vegas to New Zealand for 6 months ever come back?
Well, Bill says he is, so I believe him (yeah, right). Meanwhile he's living in paradise teaching the Kiwis everything they need to know about angel investing and entrepreneurship. He'd be a good teacher because in 2009 he was awarded the Angel Capital Association's highest recognition, the Hans Severiens Award.
So he'll be in San Francisco this week to pass the baton to the new award recipient? No? See, that's what I thought; he's lovin' New Zealand. Andy Hamilton and the ICE Angels are to blame.
Two JumpStarts, but no dead battery, that's Dave Berkus!
Dave is making his 16th appearance on the show, Ray Leach of JumpStart Ohio, his 2nd, and ACA board member Katherine O'Neill of JumpStart NJ, her first.
"The new normal," according to Ray, "is going to have a big impact on angels, on how companies get funded and how quickly they can scale." That being the VC industry's poor track record and inability to attract new investment.
It's the innovation economy of the future we're talking about.
How did angel investing get started in San Diego? My guest Vern Yates shares the story.
I knew we were going to hit it off when I spotted the elaborate model trains on his patio. I can't believe my eyes as I reach for the camera.
As we sit down, I know I'm in for a look back at the history of angel investing in San Diego. Vern's been there.
How do you succeed in angel angel investing? Start 13 years ago, in the good ole days when Vern describes returns of 40X and 150X. If you do that you'll be playing with house money for the rest of your career.
We get started with a few topics from the recent Tech Coast Angels' off site strategic planning meeting where no issue was off the table.
"Moneyapolis" it used to be called, does the term still apply today?
St Paul-based RAIN Source Capital operates 23 funds across Montana, Idaho, Iowa, South Dakota, North Dakota, Washington and Oregon; that's a lot of territory. They're funding 15-20 deals a year out of the 1,000 applications they receive. This is some operation! Even so, CFO Peter Birkeland points out "deal flow can be lumpy".
Dan Rosen of the Alliance of Angels in Seattle squares off against Vancouver's Basil Peters (no relation) in a lively discussion of term sheets and how these two former venture capitalists, now angel investors, have evolved their thinking on the critical components in term sheets.
"Incremental innovation," that's what JumpStart's Ray Leach says was happening in Northeast Ohio before his fund kicked in. JumpStart is funding seed deals then working with angel groups and venture capital for subsequent rounds.
What's their typical seed investment? $340K That's substantial and it's only one of the surprises Ray describes about funding Ohio companies.
At some level, don't we all envy the French? When you listen to Philippe you'll wish you were a French entrepreneur!
Representing 3,500 business angels in 80 angel groups, France Angels has grown at a rate close to 50% per year!
What kind of economic force can you bring to bear with a group that large? According to President Philippe Gluntz, "we invested last year in 300 deals which means we invested 60M eruos last year". Wow! But like investors everywhere, Philippe knows that's not enough.
I spent time with the founder of the San Diego Band of Angels yesterday. Vern Yates will be appearing here soon, but until then enjoy this teaser clip. The fledgling angel group would soon join forces with the Tech Coast Angels who were expanding from their Orange County and Los Angeles footholds. Today TCA has 5 networks from Santa Barbara to San Diego.
Thoughts after the Puerto Rico Venture Forum #PRVF
It's fun to observe the start of an angel group. The challenges almost overwhelm; are there enough Investors, enough good deals, acquirers and are there basic cultural issues (e.g. "business is private in Puerto Rico") that will make you question: is my time better spent on other projects?
I can relate. As Tech Coast Angels considered expanding east I helped lay some of the first bricks that would eventually build a network in Riverside/San Bernadino, called the Inland Empire. The first big break was finding a local champion, Riverside is a little more than an hour from my home plus it has serious rush hour traffic issues; getting to a dinner meeting meant leaving Orange County at 2pm! So the champion came in the form of Los Angeles member Mike Napoli, not an IE resident, but he had a 2nd home in Palm Springs, so he was driving through the IE frequently. Plus he had the perspective, besides TCA, he'd recently joined the new Coachella Valley (Palm Springs) Angel Network, so he could see just what had to be done to get the IE angel network going. Fast forward a few years and, in retrospect, it all looks easy.
"Tit -for-tat's a principle any lead investor needs to understand," according to James Geshwiler.
He's the co-Managing Director of the Common Angels in Boston and here he shares stories about leading deals, managing early-stage financial risk and how game theory affects angel group co-investing across New England.
Tech Coast Angels Chairman elect Richard Sudek has handed out 20 copies of Spencer Johnson's Who Moved My Cheese to grease the wheels of resistance to change prior to our 2nd annual offsite strategic planning day set for tomorrow at Chapman University. It's a great start for his reign and might be just the nudge we need to rethink some of our processes. As a 12 year old angel group, it's easy to get set in our ways. Maybe angel groups are especially prone to resistance to change because their members aren't exactly spring chickens. We all become more comfortable with the routine as we age and the nature of angel investing is making many of us older fast. Once venture capital makes an investment in a portfolio company our timelines to an exit are growing well beyond the 3-5 years we all imagined when we started angel investing; today we're more likely to see 7-8-9 years (and counting) to exit, so we're only becoming more prone to being set in our ways. I often say that the original founders of TCA, many of whom are still involved, weren't so young 12 years ago.
But speaking of books that might prompt change, Basil Peters' Early Exits gets my vote for Book of the Year. The premise is refreshingly simple: as soon as you fund a company get started on crafting the exit. Too often it seems we let the company muddle along on its own and as the cash reserves get thin the founders make the venture capital pitch. But venture capital has to put a lot of money to work, the average venture fund being $250M, and they need big exits to make the fund successful and billion dollar exits don't happen overnight. Contrast this with Basil's concept of funding a startup entirely with angel fundings, maybe 2 or 3 small rounds, then finding an exit partner to acquire the company for somewhere in the $20-30M range. Angels get a nice return, entrepreneurs often see a 100X return and we get out of the deal in much less time.
Our angel peers in the life sciences need venture capital relationships to fund their ambitious startups, but that's their model and it works for them. Too many times we've been tempted by the siren song of venture capital, as my recent guest, Momentum's Andy Wilson, has admitted, and end up with less well-suited deals involved in endless timelines as venture capital seeks their ultimate objectives. Meanwhile we're getting older.
"From a high of 35 investor members, we're now down to about ten active participants," Chapter President Steve Murchie was quoted. "A group that size isn't financially sustainable using our membership model, nor is it likely to drive investment volume at a pace that is fair to entrepreneurs."
David Rose, founder of Angelsoft and the New York Angels, speaks of several recent announcements and makes one on the Show. Angelsoft has recently developed new relationships with the Angel Capital Association (ACA), the National Association of Seed and Venture Funds (NASVF) and the National Angel Capital Organization of Canada (NACO), basically sewing up all the major angel associations in North America. How did he accomplish all this? Or is it more like, "what took so long"? He has over 20,000 accredited investors in hundreds of angel groups using Angelsoft. Best of all, it's free.
John Kensey's one of the original Tech Coast Angels and when I joined he volunteered to be my mentor.
Back in 2004 he was one of 3 partners who formed the Seraphim Sidecar Fund. Today it's fully invested and TCA talks about creating a new fund. John says he'll help and here he shares what he'd do differently next time.
The life of an angel fund is longer than any of us thought, and returns have been meager, but now there's news of an IPO...
Growing from 20 to 100 members since 2003, EBAN must be doing something right!
The European Business Angel Network is the association for angel groups and early stage players in Europe. With all that interest in angel investing come certain challenges, too, like cross border syndication.
Join us as we take a trip through Europe's angel investing scene.
Jeffrey Sohl at the UNH Center for Venture Research reports today that "the angel market appears to have reached its nadir in the first half of 2009". Noting that dollars invested saw, "a decrease of 27 percent over the first half of 2008". Read the report.
That's what new members want to know when they join the Tech Coast Angels. Warren Hanselman, past Vice Chairman knows exactly how we're doing; he maintains the database which tracks every one of the 157 companies we've funded. As he looks at TCA's returns, he's become an advocate for Basil Peters' Early Exits.
"The next step in the evolution of angel groups is we need to find a way to start syndicating the good deals, the deals where they're truly worthy, they're up running and their next step would normally be to go to a VC, would be to go to our sister organizations around the country and say, 'look if we band together we can put a couple of million dollars together into this thing and keep the VCs out'."
Astronomers look through their telescopes to see back in time to the beginning of the universe, so too we can observe the initial formation of an angel group. Marco Villa describes the first and only angel group in Italy, based in Milan with plans to grow to other cities: the Italian Angels for Growth.
Many European angel groups enjoy some state support or tax incentives; Marco is quick to describe the support he gets: "No, nothing", so how will angels fare in a country where the "legislators don't know anything about venture capital"? It's not going to slow Marco down.
How are angel deals done in Bavaria? And how are they different from the US? There's lots of government money available for startups, so that's not the issue, but there are challenges.
We met during the EBAN tour of Silicon Valley earlier this year, so I was eager to renew contact when Michaela Mueller emailed with questions about deal formation. She and Arne Hostrup run Netzwerk Nordbayern in Bavaria, where things are done differently than in the Valley. Some of the issues they have will surprise you, one for example, it's not finding the money.
Was he rooting for McCain/Palin when he named his angel group Maverick? If I had this interview to do over, I'd ask, but we do cover all things related to angel investing in Southern California, especially its newest angel group, the Maverick Angels. Westlake Village, to be more specific, which once hosted a Keiretsu Forum chapter. Is Maverick Keiretsu reincarnated? Just how are they unique? I do ask that question.
Southern California already has mature, well established angel groups like the Pasadena Angels and the Tech Coast Angels; is there room for one more? Will a little competition be good for entrepreneurs? Is Maverick part of the evolution of angel investing?
Here's a remastered interview from the archives: Tech Coast Angels Dave Berkus, John Harbison and Luis Villalobos join me for a discussion on due diligence. These three know what they're talking about; between them, they've funded over 130 early-stage deals. So if you see yourself pursuing angel investing any time soon, this is the show for you.
And not just for entrepreneurs, I pulled this out of the vault and dusted it off for the Southwest Regional Angel Leadership conference call; I missed the call, but wanted to contribute something to the discussion. Here it is.
Maybe you've already done an angel round and now you're looking for VC money. So how is it different pitching to VCs versus angels? Joe Platnick knows.
Joe's a long term member of the Pasadena Angels; he's on the board and he's recently joined a venture capital firm in New Zealand. What kind of a year are the Pasadena Angels having in 2009? And how did their conversion to Angelsoft go?
I've seen him around the Southland for years, always willing to come out and speak to an audience of entrepreneurs. It's part of giving back for Joe.
No Faking! Melissa Cardon and Richard Sudek on Passion
If at first you don't succeed...
Is it easier to recover from failure in the US compared to Europe?
Do entrepreneurs have a more difficult time bouncing back in say, Germany, versus Silicon Valley?
Is there a difference of perception, a stigma regarding failure between Silicon Valley and Silicon Alley? Melissa says yes.
Melissa Cardon of Pace University in New York City teams up with Richard Sudek at Chapman University in Orange County to discuss the results of their research into entrepreneur passion. Richard's also a long term member of the Tech Coast Angels and is the incoming Chairman for 2010, so he has access to the entrepreneur presentations which are the source of the data.
So what are the 3 types of passion? And why is the question and answer period after the presentation so fraught with danger for the entrepreneur?
Events
The Orange County Venture Group features "Healthcare: The Final IT Frontier" 7am on July 21st at the Pacific Club in Newport Beach. Come out and meet the local VCs.
What's the state of one of the largest angel groups in the world, the Tech Coast Angels? How has deal flow been affected by the downturn? And what about membership; how soon will it rebound? And what's deal-lead fatigue?
As an investor, "two thirds of my investments are in life science", which enjoys a special emphasis in the San Diego network. Ralph sees parallels between life science and clean tech, too, but his assessment of venture capital in San Diego surprises me.
Could you use a tax break?
Do you feel that your early-stage investments are good for the economy and should be encouraged?
So does Liddy Karter.
Sandwiched between Boston and New York you'll find the Angel Investor Forum in Connecticut. Liddy sees a lot of activity in both cities and it's led to a year where "we've invested more in 2009 than ever before!". You haven't heard that on the show lately, so who better to be leading the Angel Capital Association's Committee for Public Policy?
Another $30 billion for General Motors as they enter bankruptcy, unbelievable! What would $1B do if it were spread around to angel groups? Liddy can imagine, but is anybody listening? Not in Connecticut according to Liddy. Instead head to North Dakota, Hawaii or Maine for the best tax incentives for angels. And what has Wisconsin done to earn her vote for the strongest example of public policy effectiveness?
Save the date: check out Liddy's New Angel Summit (angels from New Jersey, New York, and New England in New Haven, get it?) September 17th.
Ever wanted to hear how angels think of the terms they offer and the returns they expect? And what will happen if the outcome is less than a complete success? That's what Angel Capital Association Chairman John Huston shares.
JumpStart Inc.'s 
It started with a meet-up, a shout out to entrepreneurs looking to meet local angel investors. The first one burdened the venue when 100 entrepreneurs arrived. Now there are bigger venues and LA's doing them, too. The format is simple: no program, just a mingle for networking. But out of the very first one, a small startup emerged and has been funded. Is that news? Yes, because it's one of only two new companies that 
So what was 
Sequoia funded 
Dan Rosen of the 
Join Miramar Ventures' Bruce Hallett, Guy Kawasaki and me at 
